Up-to-the-minute advice, information, resources, and, on occasion, commentary on federal and New Jersey state income taxes, and the various New Jersey property tax rebate programs, and insights and observations on tax policy and professional tax practice, by 40-year veteran tax professional Robert D Flach.

Monday, January 2, 2012

TAX POLICY 2012

Happy New Year!

It is obvious that temporary tax cuts, except possibly in
response to natural disasters, are bad tax policy.

“If all these breaks are really such great
ideas, Congress should make them permanent. That would mean taking their true long-term cost into account for
federal budgeting purposes instead of continuing to conceal the true cost by
extending them for a year or two at a time. If Congress is unwilling to embrace
honest accounting for the extenders, they should eliminate them.”

However as it now stands almost the entire Tax Code is
temporary – with the extension through 2012 of the so-called “Bush” tax cuts.

What should (and I say must) be done is a total rewriting
of the Tax Code – along the lines of the recommendations of the Bowles-Simpson
report.To this end it is important that
just about everything (except perhaps the payroll tax reduction) that has already
expired, or will expire on 12/31/12, is temporarily extended through tax year
2014.And it is important that this be
done early in 2012 so as to avoid confusion and uncertainty.The idiots in Congress must certainly not
once again wait until December to pass extensions.

The idiots in Congress will not attempt to accomplish
anything in 2012 (not that they accomplished anything in 2011), as it is a
presidential election year.If there is
to be any true tax reform the process will not even begin until 2013.

We know that the idiots in Congress are lazy.If the “Bush” tax cuts, and the extenders,
are made permanent at this point then the fools will have no reason to
seriously consider true tax reform, and will continue to put it off.So it is also important that the “Bush” tax
cuts, and the currently temporary tax breaks, not be made permanent.

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